Coca-Cola and Merck lead the overall market
Soft drink maker Coca-Cola (KO) ranks number 3 in this year’s group, with a year to date gain of 14.5% including just two distribution. Drug maker Merck (MRK) is close behind with a 12.8% gain with two dividend payments. Coca-Cola has done a good job navigating a changing marketplace, as consumer shift away from sugary soft drinks, and while earnings have been moving slightly lower, they could be a lot worse, and the company has done a great job building its snack and non-soft drink segments to balance out lower soft drink sales. Looking ahead, analysts see KO growing earnings by 4.7% next year, and by 5.0% per annum over the next five years, so investor sentiment should remain bullish.
Merck, on the other hand, has been growing its earnings, and profits are forecast to rise by 8.0% next year, and by 6.2% per annum over the next five years. Both stock look a little pricey at this time, with KO trading with a P/E of 49.5, while MRK has a P/E of 35.4. Given the high valuations, I would not look for either stock to move too much higher through the remainder of the year, but both should track the overall market pretty closely as long as no major negative earnings surprises occur next earnings season.
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